North America · Inc / Corp
Canada company taxes
A corporation incorporated in Canada is resident in Canada for tax purposes and pays corporate income tax on its worldwide income. Tax has two layers — federal and provincial — and they stack. The federal general rate is 15% after the standard abatement and rate reduction; each province adds its own rate on top, producing a combined general rate that ranges from about 23% in Alberta to roughly 31% in Prince Edward Island, with Ontario around 26.5% and British Columbia around 27%. The single most important point for a foreign founder is what you do NOT get. The headline 9% small-business rate applies only to the first C$500,000 of active business income of a Canadian-Controlled Private Corporation (CCPC), and a corporation controlled by non-residents is by definition not a CCPC. So a non-resident-owned Canadian corporation pays the full combined general rate (~23%-31%) from the first dollar — there is no 9% bracket for you. On the way out, dividends paid to a non-resident shareholder are hit by Part XIII withholding tax (25% by default, often reduced by treaty), which is the other piece foreigners must plan around.
- Country
- Canada
- Topic
- Taxes
- Reviewed
- June 2026
By the Lanzamo Editorial Team · Reviewed June 2026 · How we research
| Tax | Rate | Notes |
|---|---|---|
| Federal corporate income tax — general | 15% | After the federal abatement and general rate reduction. Applies to active business income of a non-resident-owned corporation (which is not a CCPC). |
| Combined federal + provincial — general | ~23%-31% | Province adds its own rate: ~23% Alberta, ~26.5% Ontario, ~27% British Columbia, up to ~31% PEI. This is the rate a foreign-owned corporation actually pays. |
| Small-business rate (9% federal) | Not available | The 9% rate on the first C$500k is for Canadian-Controlled Private Corporations only; a non-resident-controlled corporation is not a CCPC and does not qualify. |
| GST / HST | 5% / up to 15% | Federal GST 5%; HST provinces combine it (Ontario 13%, Nova Scotia/NB/NL/PEI 15%); PST provinces (e.g. BC) charge separate PST. Registration mandatory above C$30,000 revenue. |
| Withholding tax — dividends (Part XIII) | 25% | Default rate on dividends paid to a non-resident shareholder; commonly reduced by a tax treaty (often 15%, or 5% for a corporate shareholder holding 10%+ under treaties such as Canada-US). |
| Withholding tax — interest / rents / royalties | 0% / 25% | Arm's-length interest to non-residents is generally exempt; rents and royalties default to 25%, frequently reduced by treaty (royalties often 10%). |
Corporate tax: two layers, and no small-business break for you
Canadian corporate tax is federal plus provincial. The federal general rate lands at 15% after the abatement and rate reduction; the province then adds its rate (e.g. Ontario 11.5%, BC 12%, Alberta 8%), giving a combined general rate of roughly 23%-31%. The much-quoted 9% rate is a CCPC-only benefit on the first C$500,000 of active income, and control by non-residents disqualifies a corporation from CCPC status. The practical consequence: budget for the full combined general rate of your chosen province from dollar one, and let provincial rate (Alberta lowest, the Atlantic provinces highest) factor into where you incorporate if tax is a deciding variable.
GST/HST and the non-resident security deposit
Canada's federal Goods and Services Tax is 5%. Some provinces harmonise it into a single HST (Ontario 13%; Nova Scotia, New Brunswick, Newfoundland and PEI 15%), while others — notably British Columbia — keep a separate Provincial Sales Tax alongside GST. Registration is mandatory once taxable Canadian revenue exceeds C$30,000 over four rolling quarters. The non-resident twist: a foreign-owned business with no permanent establishment in Canada is generally required to post security with the CRA before it can get a GST/HST account, a deposit and compliance hurdle that residents never encounter.
Dividends and Part XIII withholding for foreign owners
When your Canadian corporation distributes profit to you as a non-resident shareholder, Canada imposes Part XIII non-resident withholding tax. The statutory rate is 25% of the gross dividend, withheld and remitted by the corporation. A double-tax treaty between Canada and your country of residence usually cuts this — commonly to 15% for a portfolio shareholder, and to 5% for a corporate shareholder holding at least 10% of the votes under treaties like the Canada-US Convention. This withholding is the real exit cost of a Canadian corporation for a foreign owner, so model your after-tax distribution, not just the corporate rate.
How a non-resident-owned corporation is taxed in practice
Because the company is incorporated in Canada it is Canadian-resident and taxed on worldwide income — living abroad does not move the tax base offshore. A separate regime, Regulation 105, requires 15% withholding on payments to non-residents for services physically rendered in Canada, which can catch a non-resident owner who flies in to do work for their own corporation. And running genuine staff or a fixed place of business in another country can create a foreign permanent establishment and split the tax. For a clean single-jurisdiction setup, keep operations and management consistent with one Canadian tax home.
Losses, SR&ED and incentives
Non-capital (trading) losses can generally be carried back 3 years and forward 20 years against the corporation's income. Canada's flagship incentive is the SR&ED (Scientific Research and Experimental Development) tax credit, made permanent and enhanced in recent budgets — but the generous 35% refundable credit is reserved for CCPCs, so a non-resident-owned corporation receives the 15% non-refundable federal credit instead (still usable against tax payable, and stackable with provincial R&D credits where the work is done in-province). The credit follows where the research happens, so it only helps if you genuinely do R&D in Canada.
Filing calendar
The T2 corporate income-tax return is due no later than 6 months after the fiscal year-end. Any balance of tax owing, however, is due earlier — generally 2 months after year-end for a non-resident-owned corporation (the 3-month grace applies only to certain CCPCs, which you are not). Quebec and Alberta require a separate provincial return; elsewhere the province piggybacks on the federal T2. GST/HST returns are filed monthly, quarterly or annually depending on revenue, and the C$12 Corporations Canada annual return (for federal corporations) plus any provincial annual filing fall due each year independently of the tax return.
Frequently asked questions
Do I get the 9% small-business tax rate?
No. The 9% federal small-business rate on the first C$500,000 of active income is exclusive to Canadian-Controlled Private Corporations, and a corporation controlled by non-residents is not a CCPC. You pay the full combined federal-plus-provincial general rate — roughly 23% in Alberta up to about 31% in PEI, with Ontario near 26.5% and BC near 27%.
How much tax is withheld when my Canadian company pays me a dividend?
By default 25% under Part XIII non-resident withholding tax. A tax treaty between Canada and where you live usually reduces it — commonly to 15%, and as low as 5% for a corporate shareholder owning 10% or more of the votes under treaties such as the Canada-US Convention. The corporation withholds and remits it, so factor it into your real take-home distribution.
Will my Canadian corporation be taxed on income earned outside Canada?
Yes. A corporation incorporated in Canada is Canadian tax-resident and taxed on its worldwide income, not only Canadian-source income, regardless of where the owner lives. You may get foreign-tax credits or relief through a treaty or a foreign permanent establishment, but the starting point is worldwide taxation.
As a non-resident, do I have to register for GST/HST?
Only once your taxable Canadian revenue exceeds C$30,000 over four rolling quarters (you may also register voluntarily below that to recover input tax). Be aware that a non-resident with no permanent establishment in Canada is generally required to post security with the CRA to obtain a GST/HST account — a step domestic businesses do not face.
Sources
- Corporations Canada — incorporate a business corporation (official)
- Province of British Columbia — incorporated companies (no director-residency rule)
- CRA — Register for a GST/HST account (non-resident security)
- CRA — Non-resident GST/HST enquiries and registration
- CRA — Rates for Part XIII (non-resident) withholding tax
- CRA — Required withholding on amounts paid to non-residents for services (Regulation 105, IC75-6)
- PwC Tax Summaries — Canada corporate income tax (federal 15% + provincial)
- PwC Tax Summaries — Canada corporate withholding taxes
- DLA Piper — director-residency rules in Canada (federal vs provincial)
- EY — 2026 Canadian corporate income tax rates (active business income)
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